CUSTOMERS FEEL PINCH OF BANK PROFITS

Bank profits are soaring and you're wondering, as you nurse your low-yielding savings accounts and struggle with rising fees and charges, how can that be?

"Why isn't some of that gravy being passed my way?" you're asking. Especially when outfits like Chase Manhattan Bank and NationsBank saw their earnings rise by 31.8 percent and 42.8 percent, respectively, in the first quarter?

Good question.

The answer comes in two parts: You're benefiting in some ways from those sky-high profits, but taking a beating in other ways.

On the upside:

-- You're footing much of the bill for the banking industry bailout, which analysts once estimated would cost the U.S. government as much as $500 billion. You've done it by being paid lower and lower yields on savings and charged pretty high loan rates over the past five years.

But things don't look as bleak as they once did. A lot of institutions that appeared headed for the graveyard have recovered. Today, more than 90 percent of savings and loans are now in the black, while 86 percent of banks enjoy a top three-star rating on their financial condition from Veribanc Inc. Their good health has reduced the burden on regulators and, indirectly, the taxpayers' final tab.

-- Banks are now loaded with cash to lend so they're showing restraint in boosting borrowing rates. Indeed, loan demand is rising, but it still doesn't match the banks' huge supply of cash.

Consequently, auto loans average 8.42 percent and home equity credit loans at 7.76 percent. They remain good deals.

-- Banks today are also more eager to lend you money if you own a business - a good economic sign - and many are relaxing their credit standards to do so.

On the downside:

-- Money market account, passbook and interest-bearing checking rates are going nowhere. While the banks are reporting bigger profits, you're earning less on interest checking (a paltry 1.49 percent) than you did in February (1.54 percent), when rates started to climb.

California checking customers are really taking it on the chin: Banks there pay only 1 percent on checking but charge more than 18 percent on unsecured personal loans and 19.5 percent on credit cards. A ripoff if there ever was one.

Nationwide, the average money market account earns 2.42 percent, or only 0.1 percent more than it did five months ago, according to Bank Rate Monitor. -- Bank fees and charges keep rising. Many services that used to be free now cost. The tariffs are up on bounced checks, ATM transactions and the like. There are extra charges for everything from letting your balance slip below a certain minimum to just closing an account!

Chase Manhattan, for one, reports that in the last quarter its worldwide fees and commissions rose by 24 percent.

So what makes all this happen?

In tracking interest rates for 11 years, we've found that, market by market, banks tend to pay and charge what they can get away with. Period. As long as no one hollers and only a few people switch banks, nothing changes.

In today's low-rate environment, some folks are moving their money into investments such as stocks and mutual funds, but banks haven't been hurt by that.

The question, then, is what the biggest banks are going to do with their record profits. If they go out and buy even more banks, there will be less competition. And if fewer outfits have to fight for your business, what might that do to rates, fees and charges?